Since 2008, an independent look at challenges and opportunities in sports and financial investing, with occasional diversions as my mood takes me. Nothing is for sale, and this not a Profit and Loss report either. They're boring.

Saturday, 2 July 2011

The world of golf was rocked today by the decision of the US based PGA TOUR to implement several changes to their tournament rules.Any players who have career earnings of $10 million or more will, effective July 18th, be subject to a “Premium Score Adjustment”.The full announcement released earlier today to a ‘small number’ of players reads:

From 18th July 2011 PGA TOUR will be making some changes to the scoring system which may affect you directly.Full details of the changes can now be found on the PGA TOUR page under the About Us section of the website but the changes can be summarised as follows:Players will be subject to Premium Scoring Charges if they satisfy all of the following conditions:Career Gross Earnings exceed $10,000,000Lifetime Major Tournament Earnings generated less than 99% of Career EarningsPlayed in more than 2 tournaments lifetimeAs of 30th June 2011 your golfing activity satisfies the criteria set out above. In order to view the Premium Scoring Charge rate that will apply to your future scores as well as the calculation that determines your rate and the date from which the rate becomes effective, we have developed a secure online portal. The portal can be accessed at unfairterms.pgatour.com by logging in with your PGA TOUR username and password.For the purposes of introducing a change to the scoring that applies to your golf, we will assume that you were under the misguided apprehension that you would always be treated on a ‘par’ with other golfers. For example, if the Premium Scoring Charge rate applicable to your golf is now set at 40%, we will assume that you have always scored at the Premium Scoring Charge rate at 40%. This will ensure that you are considered to have always played under unfair rules at the point that the new scoring rate becomes effective. For more information, please visit an FAQ section on our forum. We hope the information provided will outline why we are making these changes and how they will be implemented in practice. Alternatively, if you have any additional questions about the changes we are making that are not covered in the FAQs then please contact your account manager or email premiumscore@pgatour.com.

Players who meet the criteria detailed above will now have their score adjusted as follows.A round at over par – no adjustment.A round at par – player’s score will be subject to a 20% adjustment.Under par rounds will be subject to adjustments according to the following scale:1 or 2 under – score subject to a 40% adjustment3 to 5 under – score subject to a 50% adjustment6 or more under – score subject to a 60% adjustmentQ and A:Q: The scoring in golf has been unchanged since God invented the game while on vacation at St. Andrews in 1457. Why has the PGA decided to break with tradition now?A: These steps are necessary for the PGA TOUR to continue to be able to attract new professionals. We have found that new players are reluctant to enter tournaments because leading players are too good. The new scoring rules should help new players break through.Q: The new rules make it almost impossible for a player meeting the criteria to ever win again. Does the PGA TOUR realize that for many players, they have dedicated their lives to golf, and played many years in good faith supporting the TOUR, and now find themselves left high-and-dry? Would it be fair to say that you are no longer "putting" up with winners and attempting to "drive" them away? A: The PGA TOUR welcomes winners - just not quite as much as we used to. The same players winning all the time is bad for our business. We do not want children looking at the success of Tiger Woods for example, and wanting to emulate him. We would rather pretend that no one makes any money out of professional golf, and have our tournaments full of semi-pros / amateurs that no one has ever heard of. Our aim is tournaments where mediocrity reigns supreme, and excellence is seriously restricted.Q: But won’t some of these ‘semi-pros / amateurs’ eventually win the $10,000,000 and thus effectively have their careers cut short themselves?A: $10,000,000? I think you’ll find the number is closer to $1,000,000 actually. $10,000,000 is just a test. Oh wait, that’s not supposed to be public knowledge yet, forget I ever said that. Next question please.Q: Why aren’t you increasing the Premium Scoring Charge rate that everyone is asked to pay?A: The introduction of the Premium Scoring Charge is designed to ensure that all consistently successful players generate in green fees at least what has been spent by the PGA TOUR to provide the service. However, there is still a very small group of our most consistently successful players who are not contributing enough towards the maintenance and long-term growth of the grass and rough. Q: Are you not concerned that the top players will form a breakaway organization, called the Real PGA or something similar, and play elsewhere? A number of players who have yet to reach the ‘limit’ are already suggesting that their incentive is somewhat diminished.A: No, not at all. We believe players would be unwilling to join what sounds a bit like a 1970’s terrorist group or a Spanish football team, but also we have the biggest tournaments in the world. We have heard that there is another Tour called the European Tour or something with a purple logo, but nobody plays there.Q: It has been reported that several big-hitters have in fact started to play over there now. Is it not a concern that as newer players see the prize money over there build up, that they will be attracted to it and the PGA TOUR will become a mere shadow of its former self – that everything the PGA TOUR was founded on – fair play for all, a medium where smart minds may compete fairly, top class competition etc. will be lost? Are the founders happy to see this latest turn of events?A: We’re a Stock Exchange traded company now. Principles don’t mean anything.Q: So Tiger Woods is still welcome then?A: You’re changing the subject – I like that.Q: Well yes, sometimes I get distracted and can’t resist a little dig. My final question is what will you do if you find the top players defecting and taking the majority of other players with them – the players who still have the dream of winning along with those who like to play among the hustle and bustle of competition?A: It will never happen - unless the European Tour gets its act together I suppose.

I do have some sympathy for people in similar positions to yourself who have made money based on their ability to price up inplay markets on the fly. From what I gather from your blog you currently generate somewhere around 19% in charges which to me seems a more than fair split on profit. If I'm right in assuming that the majority of your activity is inplay then like me you'll find there is no real alternative which leaves you in a rather awkward position give Betfair an extra 20(?)% of your profits to them or stop altogether.

If your returns are relatively consistent then given the profit you must be generating to hit £250K in such a relatively short period of time I would have thought it probably was worth carrying on. Whatever you decide, I wish you the best of luck.

About Me

I have had a life-long interest in sports and after studying Pure Mathematics with Statistics at secondary school, have been fascinated by odds and probability.
The first system I came up with was a simple one - back the favourite and double up after a loss until a winner. Simple enough in theory, and I told my Dad about it. Not being a betting man himself, he ran it by some of his colleagues, and came home to tell me that it wouldn’t work because a long losing run would mean that the bank would be empty. Then there was always the possibility that the winner would be returned at odds-on, meaning that the total returns would not match the outlay. Not what a ten year old wants to hear! Only slightly daunted, I then went on a search for the Holy Grail, the secret to riches that I knew was out there somewhere. Finally in 2004 I stumbled across an article about Betting Exchanges and four years on I am able to make a steady profit. I am at that age where I can start thinking about retirement and anything I make from trading sports will bring that day forward.